Outside of the financial services industry, only a few industries provide relatively inexperienced professionals with the potential to earn substantial income in the first year of employment. In the financial services industry, there are few professions that give newcomers the opportunity to earn immediate income like life insurance agents. In fact, a diligent insurance agent can generate more than $100,000 in sales in the first year.
However, success as an insurance agent is not without cost. This is a difficult area, and sooner or later most participants will be exhausted. Insurance agents hear the word “no” far more often than they hear the word “yes”. It is not uncommon for the word “no” to carry a lot of swearing and the well-known door on the face. In addition, many people have low evaluations of insurance agents: some even equate them with glorified scammers. But for those who can tolerate potential rejection, the salary and flexibility of being a life insurance agent are worth it.
- The career of a life insurance agent is profitable, but it involves constant busyness, networking, and many situations that are rejected before making a sale.
- A life insurance agent may get a small salary at the beginning, but in other ways mainly rely on commissions to make a living.
- Finding potential customers is difficult and time consuming; once you track down these customers, getting them to make a purchase becomes even more difficult.
- A strong sales background allows you to be hired; once you are hired, you must take a 25-50 hour course and pass the state-administered license exam.
- When looking for a job, please make sure you only apply to companies that have received good reviews from rating agencies such as Moody’s and Standard & Poor’s.
Overview of the insurance sector
Although there are many types of insurance (from auto insurance to health insurance), the most profitable occupation in the insurance field is a person who sells life insurance. Agents that focus on this end of the insurance market can help families, businesses, employers, and other parties prevent financial losses when someone dies.
Insurance agents who sell this type of insurance are either “captive” agents, which means they only sell insurance from one company, or “non-captive” agents, which means they represent multiple insurance companies. Either way, a typical insurance agent will spend most of his time on some type of marketing activities to identify people who may need new or additional insurance, provide them with quotes from the company they represent, and convince them of them Sign a new insurance contract.
Generally, a life insurance agent receives 30% to 90% of the amount (also known as premium) paid by the customer for the policy in the first year. In the next few years, the agent may receive 3% to 10% of the annual premium, also known as “renewal” or “trailing commission.”
Become an insurance agent
Let’s look at an example of how a life insurance agent makes money:
Example of insurance sales commission
Uni insurance agent sells a whole life insurance policy to Ryan covering the rest of Ryan’s life (assuming they continue to pay premiums). Uni’s insurance company pays a 90%/5% commission for the lifetime policy, which means that the sales agent receives 90% of the first year’s premium and 5% of the future renewal.
The cost of this policy is Ryan’s $100 per month or $1,200 per year. Therefore, in the first year, Uni will receive a commission of $1,080 ($1,200 x 90%) by selling this life insurance policy. In all subsequent years, as long as Ryan continues to pay the premium (US$1,200 x 5%), Uni will receive a renewal fee of US$60. Agents who sell one or two policies per week at this commission level can earn between US$50,000 and US$100,000 in their first year as an agent.
Life Insurance Agent Qualification
As mentioned earlier, life insurance agents are not the profession of thin-skinned or timid people. In fact, more than any other factor, including education and experience, a life insurance agent must have a fighting spirit. They must be people who like the thrill of hunting and the rush of sales, and regard rejection as a stepping stone to ultimate success. For those who think they are introverted, mild-spoken, or afraid of conflict, life insurance sales are not ideal.
Most life insurance companies do not have formal education requirements to become agents. Although many people prefer college graduates, this general rule is often overlooked in favor of “appropriate” candidates. Previous experience in the insurance industry is not required, because most large and medium-sized insurance companies have internal plans to train their sales staff on the products they will sell.
Although it is easy for a tenacious cadre to be hired by a reputable insurance company, there is a non-negotiable barrier between potential insurance agents and their commissions: state permits. Insurance agents are currently licensed by one or more states in which they will sell insurance. This usually requires passing a state-administered license exam and attending a license course that usually takes 25-50 hours.of
Sales Commission If life insurance agents only charge commission, they may earn it in the first year; this is the highest commission for any type of insurance.
Employed to sell insurance
If you feel that the life insurance sales career is right for you, there are a few steps you can take to find your first job. First, you need to create a resume that highlights your entrepreneurial spirit. You will want to include anything that shows you take the initiative to make things happen, whether it’s starting your own business or taking someone else’s business to the next level. Life insurance agents must be motivated and capable of becoming self-starters. A resume showing records of such behavior will help you take the first step.
After completing your resume, you will need to start searching for positions and applying. It is important that you do not feel pressured by taking your first position, because working for the wrong company will both exhaust you and bother you for the rest of your insurance career. Ideally, you want to work for a well-known company that has a good reputation among consumers, other agents, and insurance rating agencies.
Perhaps the best starting point for deciding where to apply is to visit the insurance company rating websites of AM Best, Moody’s, or Standard & Poor’s. From there, you will be able to build a list of companies that have received an “A” or higher rating in your state. These companies usually provide the safest products at reasonable prices and emphasize compensation and retention of high-quality agents.
Life insurance agents work hard; most agents do not exceed one year. On the bright side, this means that there are ongoing job vacancies and it may be relatively easy to get started as a new employee.
Must follow up
After creating this list, start looking at each company. Due to the high turnover rate of insurance agents, most companies publish their job listings in prominent locations by geographic area, which makes it easy for you to search for them. When you find that a company in your area seems to fit your personality, apply for the position and make sure you follow the instructions on the company’s website.
Answer the phone every week until you hear any answer. Many insurance company recruiters will refuse to interview potential agents who do not make follow-up calls first; this is considered a strong indicator of potential agent resilience. During the interview, continue to convey your entrepreneurial spirit and “never give up” personality; most managers will hire someone based on these factors rather than all others.
If you are lucky enough to get the job, you can expect that your first 12 months will be used to distribute a large number of business cards and make a large number of phone calls. Your sales manager will be the first to remind you that your only “purpose” in life is to find potential customers. In fact, they are more interested in the number of times you contact each week than you know about their product line.
In the first few months, you may struggle financially until your first sales commission starts to roll in. Although some companies provide salaries to prevent newbies from starving, this situation is becoming less and less. Many agents are now lucky that they can get one to two months of training compensation before being placed on a “commission only” basis.
Although the life insurance industry promises generous returns for those who are willing to work hard and endure large numbers of rejections, there are two pitfalls you need to be aware of. First, you are likely to sell to your friends and family. Although this may be tempting and seems like a good idea to get you started, it can also build a lot of bridges with the people you care about.
Second, you should visit the website of your state insurance commissioner and review the history of complaints against the company you are considering working for. You will usually find that insurance companies with ratings lower than “A” and those that use multi-level marketing plans to sell insurance have a much higher incidence of complaints than larger, more mature companies.
Accepting a job from the wrong insurance company can exhaust you and ruin your dreams of a promising career. If you are really eager to work in life insurance sales, please take your time and wait for the right opportunity in the right company. Doing so will maximize your chances of long-term success.